Carnaby Resources and Hammer Metals Ink Mt Hope Mining Lease Deal

THE BOURSE WHISPERER: Carnaby Resources (ASX: CNB) has struck a deal with Hammer Metals (ASX: HMX) that will result in Carnaby expanding its footprint adjacent to and surrounding the company’s 100 per cent-owned Mount Hope Mining Lease in Queensland.

Carnaby Resources explained the acquisition of three Sub-Blocks surrounding its Mount Hope mining lease ML90240 will allow it to optimise the Mount Hope Central and Mount Hope North open pits to their full extents, unrestricted by the current mining lease boundary.

The Mount Hope mining lease ML90240 currently contains a Mineral Resource of 10.3 million tonnes at 1.7 per cent copper equivalent (CuEq) for 173,000 tonnes CuEq.

Carnaby considers the benefits of being able to mine these larger open pits will be important to the Mount Hope development in respect to scheduling, capital expenditure and life of mine cashflow.

“This is a great transaction for both companies and their shareholders,” Carnaby Resources non-executive chairman Peter Bowler said in the company’s ASX announcement.

“For Carnaby it ensures we now have the unfettered ability to develop the Mount Hope Central and Mount Hope North deposits in the most optimal and unconstrained manner.

“We look forward to advancing the Mount Hope development and the broader Greater Duchess Scoping Study which is expected to highlight the significant value our projects can deliver to Carnaby shareholders.

“We are also highly encouraged by the exploration potential along the Mount Hope corridor both in the near mine environment for direct extensions of the lodes into the area acquired and for mineable satellite deposits like South Hope and The Stubby where significant historical drill results have been recorded.”

Hammer Metals does alright from the deal as well with total consideration payable by Carnaby Resources being up to $20 million.

Hammer will retain 30 per cent equity and to be free-carried by Carnaby to production from the three Sub-Blocks.

The initial tranche of payments comprises $4 million in cash and $5 million in Carnaby shares.

Hammer indicated this will provide funding for exploration drilling with a view to increasing its Mount Isa regional copper resource inventory.

A further $5 million in cash will be payable to Hammer upon a Mount Hope open pit decision to mine.

A final payment of $6 million in cash will be made upon a final investment decision for any separate new development on the Sub-Blocks (which could include prospects such as South Hope, Mount Hope U/G Extensions and The Stubby).

“We are extremely pleased to have realised this strong valuation outcome of up to $20 million for the three Sub-Blocks as part of this landmark transaction with our neighbour, Carnaby Resources,” Hammer Metals managing director Daniel Thomas said in his company’s ASX announcement.

“We see this as a good example of the emerging mining sector working collaboratively to deliver value to shareholders through a pragmatic and commercial approach to the advancement of copper-gold assets.

“With a material equity position in these Sub-Blocks, Carnaby will be well placed to progress the Scoping Study for the Greater Duchess project, without the previous constraint of the lease boundary at Carnaby’s key Mount Hope Central tenement.

“Importantly, Hammer shareholders maintain upside exposure to the future development of the three Sub-Blocks through the equity we will retain as well as the potential to receive future cash payments linked to a decision by Carnaby to mine at the Mount Hope Central and Mount Hope North deposits (part of Carnaby’s Greater Duchess project) and a decision to progress open cut or underground operations from within the Sub-Blocks themselves.

“Hammer will now use its enhanced cash position to intensify our exploration efforts both at Kalman as well as at our other exciting copper prospects such as Hardway, Bullrush and Mascotte, as we look to add to our existing copper inventory strategically located in the Mt Isa district of North Queensland.”